Pensions - Articles - Aegon comment on latest ONS pension contributions data

Kate Smith, Head of Pensions at Aegon on the ONS statistics, which show a dramatic fall in pension contributions made to occupational pension schemes in the immediate aftermath of the Covid-19 pandemic.

 “The latest ONS statistics clearly show what we had all suspected – a dramatic fall in pension contributions directly linked to the pandemic. Employer auto-enrolment duties continue for all eligible employees, including furloughed employees during this time, so the good news is that contributions continued to be paid during this time for many. But the impact of lower furloughed wages and job losses has been clearly demonstrated with a dramatic 11% drop in employee contributions and a 5% fall in employer contributions between the first and second quarters of 2020. This doesn’t include contributions payable to contract-based schemes, which is most likely experiencing a similar trend. But alarmingly these figures represent just the start of a trend, as furlough has continued and job losses are increasing. The longer term impact of this could seriously affect the financial wellbeing of some people by putting a massive dent in people’s retirement plans and ability to save for the future.

 “Initial figures showing payments and income withdrawals have fallen slightly in the first half of 2020 are encouraging, showing that the over-55s have been cautious when accessing their pension pot while values are depressed. But the picture may well have changed in the second half of 2020 as the pandemic continued. Pensions are designed to provide an income throughout retirement and reducing the amount of income withdrawn during a period of investment market downturn could be important for the longevity of the pension pot.”


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